I got another 50% pop (aso f 3:30 p.m. New York time) today in the price of the Advanced Micro Devices (AMD) September 17, 2021 Call Options with a strike price of $92.50 (AMD210917C0009250). I’m going to take my profits here. With the end of earnings season in the next two weeks, I think the risk/reward ratio for holding stocks is shifting toward risk. And I’d rather be more in cash rather than less as we head into what I see as a volatile fall.
I expected the jump in the Advanced Micro Devices (AMD) Call Options (expiration of September 17 and strike at $90) before yesterday’s earnings report. Didn’t get it. Then. But today this option is up 72.17% to $9.90 on a 7.36% gain in the price of the shares to $97.74 (as of 2:20 p.m. New York time.) So I’m selling.
With everything tech (just about) selling off today (along with the rest of the market) and with the shares of the tech companies due to report today dropping as well, I think the odds have improved for a bounce in those reporting companies on earnings surprises. Microsoft (MSFT) is due to report today after the close and I think there’s a good likelihood that the company will post even better than expected numbers from its Azure Cloud business.
With the major indexes all down ahead of tech earnings–and fear up–I’m pulling out my VIX options trade again. The rule here, until modified by reality (pesky little thing) is to buy when complacency drives the “fear index” to 16 or below, and to sell when fear rises and pushed the CBOE S&P 500 Volatility Index (VIX) to 20 or so. This morning selling in the market sent the VIX up to 19.85, close enough for me to 20, and I’m selling the October 20, 2021 Call Options
An odd market before big tech earnings #1–I’m holding onto my AMD and APPL options until after earnings
As of 12:15 p.m. the Standard & Poor’s 500 was down .01% and the Dow Jones Industrial Average was lower by 0.75%. Tech stocks were down much more with the NASDAQ Composite off 1.85% and the NASDAQ 100 lower by 1.82%. The tech companies due to report earnings today after the close were all down. Apple (AAPL) was lower by 1.68%. Advanced Micro Devices (AMD) had dropped 2.01%. And Microsoft (MSFT() was off 1.66%.
Intel’s disappointing guidance sets up good earnings report for AMD on Tuesday–here’s how I’d time selling my AMD Call Options
The September 17 Call Options on Advanced Micro Devices with a strike price of $90 gained another 9.09% today. The company reports earnings after hours on Tuesday July 27. I’d certainly be thinking about selling and taking my profits on these options before the actual earnings announcement.
The Standard & Poor’s 500 closed up 0.20% today, July 22. The Dow Jones Industrial Average squeezed out a 0.07% gain. But if you were looking for bigger upside moves, turn your eyes to the technology sector.
Just a reminder: To profit from anticipation of strong and maybe even better than expected tech stock earnings using Call Options, you want to buy the options before the actual earnings announcement. You’re betting on a rush to get in on the good earnings news before the actual news. Which means that if you’re looking to buy Call Options on Apple (AAPL) or Advanced Micro Devices (AMD) you want to do it NOW, since these companies announce second quarter earnings next week on July 27. Here are my preferences in tech stocks earnings options play
As of 2:40 New York time the September 15, 2021 VIX Call Options with a strike at 20 (VIX210915C00020000) were trading at $5.90 a share, up 40.48% on the day on a move higher in the CBOE S&P 500 Volatility Index (VIX) of 30.35% to 24.05. I’m selling this volatility hedge out of my Volatility Portfolio with a profit of 17.5% since I added it to this portfolio on June 1.
On Thursday, July 15, Taiwan Semiconductor Manufacturing (TSM), the world’s leading chip foundry, reported earnings of 93 cents a share for the second quarter, up 18% year over year. That was inline with analyst estimates. Sales rose 28%. The company raised its revenue guidance for the third quarter to a range of $14.6 billion to $14.9 billion. The midpoint of that range, $14.75 billion, was above the Wall Street consensus estimate of $14.57 billion. Sales in the third quarter of 2020 are $12.4 billion.Taiwan Semiconductor said that it now expects sales to grow more than 20% this year, an increase from the 20% target announced earlier in the year. For 2020-2025, the company raised its revenue forecast to a compound annual growth rate of 15% from a previous target of 10% to 15%. But the stock dropped 5.5% on July 15 and fell another 1.52% on Friday, July 16. Why?
On July 15, General Motors announced that Brightdrop, its new unit for recharging electric vehicles, would expand to the recharging of commercial fleet vehicles (such as FedEx.) GM named EVgo (EVgo), already partnering with GM to expand its network of fast charging stations, as a preferred partner in the fleet effort. Yesterday shares of EVgo jumped 14.18% on the news. Today, Friday, July 16, the stock gave back 2.57%. EVgo is already a member of my Volatility Portfolio where it is up 4.81% since I added it on May 19, 2021 through a purchase of shares in the the SPAC that would take the company public via a reverse merger. I’ll be adding EVgo shares to my “Millennial Portfolio (for investors with more time than money)” on Monday
My strategy for trading volatility using the CBOE S&P 500 Volatility Index (VIX) has two parts